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Selling Land in Bangladesh: Capital Gains Tax Guide 2026-27

If you sell land in Bangladesh, the profit is taxed as a capital gain under the Income Tax Act, 2023. This is true whether you bought the land or inherited it. The rate is 15% if you held the land for more than five years, and your normal income tax rate if you held it for five years or less.

The Finance Act, 2026 changed several rules from the 2026-27 tax year. These include how tax paid at the sub-registry office is treated, how gifts (hiba) are handled, and how deals with developers are taxed. This guide explains what every land seller and heir should know before signing a sale deed.

When does capital gains tax apply?

Tax applies when land is transferred. Under section 2(93) of the Act, a transfer includes a sale, an exchange, or giving up a right in the land. Section 57 makes the profit from that transfer a "capital gain".

Some events are not a transfer, so no capital gains tax arises:

Inheritance. Heirs pay nothing when land passes to them on the owner's death. Tax arises only if an heir later sells.

Gift (hiba), will or bequest. The giver pays no capital gains tax. From 1 July 2026, the sub-registrar collects gift tax under the Gift Tax Act, 1990 instead (new section 125(2A)). Gifts to a son, daughter, father, mother, husband, wife, full brother or full sister are exempt from gift tax.

Transfer to an irrevocable trust, and partition of a Hindu undivided family.

One exception: land held as stock-in-trade by a real estate business is not a capital asset. Its sale is taxed as business income.

How is the gain calculated?

Under section 58, capital gain = sale price − cost of acquisition.

The sale price is the higher of what you actually receive and the market value of the land on the date of transfer. If you receive money above the deed value, that extra amount is also a capital gain. You should keep bank records to support it.

The cost of acquisition depends on how you got the land:

For heirs, this rule is often good news. Land bought decades ago for a small price is valued at its market value on the date of inheritance, which usually means a much smaller taxable gain. The catch is proof. Heirs should record inherited land in their income tax return, at a supportable value, from the year they inherit it.

Valuation safeguards (section 61). If the market value is more than 15% above the price you declare, the tax officer can fix the market value. If the market value is more than 25% above the declared value, the tax officer may offer to buy the land at that declared value.

What rate applies? The five-year rule

For individuals, the rate depends on how long you held the land (Seventh Schedule, paragraph 1). For inherited or gifted land, the period starts from the date you received it.

A capital loss on land can be set off only against capital gains, not against salary or business income (section 70).

Tax paid at the sub-registry: now an advance, and refundable

Under section 125, the sub-registrar will not register a sale deed until the seller pays tax at source. From 1 July 2026, this must be paid by e-challan for each deed. The law caps this tax at the highest of Tk 20 lakh per katha, Tk 1,000 per square foot of building, or 10% of the deed value. The actual rates depend on the area and are set by the Withholding Tax Rules, 2026.

The important change for 2026-27 is in the new section 163. Tax collected at registration is now an advance payment, not the final word:

It is credited against the actual capital gains tax worked out in your return.

If it is more than your real liability, the excess can be refunded or carried forward.

If it is less, you pay the balance with your return.

In practice, a seller with a small real gain, such as an heir whose inherited value is close to the sale price, may be able to recover part of what was paid at registration.

Other rules worth knowing:

Return proof. For land in a city corporation, paurashava or cantonment area with a deed value above Tk 10 lakh, the seller must show proof of filing an income tax return (section 264).

Developer deals. If you give land to a developer in exchange for flats, cash, signing money or rent, the total value you receive minus your land cost is taxed at 15%. You may pay it in three equal yearly instalments (new section 58(3)–(4)).

Three simple examples

The figures below are for illustration only.

Example 1: Inherited land, sold after five years. Rahim's father bought a plot in 1995 for Tk 5 lakh. His father died in 2015, when the plot was worth Tk 40 lakh. Rahim sells it in 2026 for Tk 1.2 crore and spends Tk 2 lakh on the transfer.

The father's original Tk 5 lakh is ignored. Tax paid at registration is credited, and any excess is refundable.

Example 2: Purchased land, sold within five years. Karim bought land in 2023 for Tk 50 lakh and spent Tk 5 lakh on registration. He sells in 2026 for Tk 80 lakh. His gain is Tk 25 lakh. Because he held the land for five years or less, the Tk 25 lakh is added to his other income and taxed at his normal slab rates. Tax paid at registration is credited.

Example 3: Inherited land, sold within five years. Salma's mother died in March 2023. The land Salma inherited was then worth Tk 60 lakh, and she shows that value in her return. In 2026, within five years of receiving it, she sells the land for Tk 90 lakh and spends Tk 1.5 lakh on the transfer. Her taxable salary that year is Tk 10 lakh.

Capital gain = 90,00,000 − 60,00,000 − 1,50,000 = Tk 28,50,000. Because she sold within five years, the gain is added to her salary. Tax on total income of Tk 38,50,000 at the 2026-27 slab rates:

On her salary alone, the tax would have been Tk 75,000. The land sale therefore adds Tk 6,90,000 of tax, about 24% of the gain. Had she sold after five years, the tax on the gain would have been Tk 4,27,500 at 15%, a saving of Tk 2,62,500. Tax paid at registration is credited against the Tk 7,65,000. (Tax rebates and surcharge are left out to keep the example simple.)

Lawful ways to avoid or reduce tax on inherited land

The law gives no outright exemption for selling inherited land. But these lawful steps can cut the tax sharply, sometimes to almost nothing:

Record the value at inheritance properly. Your cost is the market value on the date you inherited (section 58). Show the land in your return's asset statement from that year, supported by the succession certificate, mutation record and nearby deed values or a valuation report. The better supported the value, the smaller the taxable gain.

Sell soon after inheriting, at market value. If you sell shortly after inheriting, the sale price and the value at inheritance are close, so the gain and the tax can be nearly zero. Most of the tax paid at registration may then be refundable (new section 163).

Wait until five years have passed. If the gain is large, selling after five years caps the tax at 15%. In Example 3, this would have saved Tk 2,62,500.

Gift to close family instead of selling. If the land is meant to go to a family member anyway, a hiba can replace a sale. A gift is not a "transfer", so there is no capital gains tax (section 2(93)). Gifts to a son, daughter, parent, spouse, or full brother or sister also pay no gift tax. The gift must be genuine; money changing hands behind a hiba may be treated as a sale.

Deduct every cost. Add transfer expenses and any development costs incurred after inheriting, such as earth filling or a boundary wall, to your cost. Keep the receipts.

Set off capital losses. A loss on selling another capital asset in the same year can be set off against the gain on the land (section 70).

Claim back excess tax. If the tax paid at registration exceeds your real liability, claim the refund in your return.

What not to do: showing a low deed value and taking the rest in cash is tax evasion, not planning. If the market value exceeds the declared price by more than 15%, the tax office can fix the value itself (section 61), and penalties may follow.

Common mistakes, and how Justice Corner can help

These mistakes cost land sellers money:

Not showing inherited land in the tax return, which leaves no proof of its value at inheritance.

Selling just before the five-year mark, when waiting a few months could bring the rate down to 15%.

Taking money above the deed value in cash, with no bank record to support it.

Treating the tax paid at the sub-registry as final, and missing a refund.

Signing a developer agreement without planning the 15% tax and the instalment option.

Justice Corner advises sellers, heirs and landowners on the full transaction. We work out the tax before you sign, prepare the deed, gift (hiba) and succession documents, and file the return that claims your credit or refund. Contact us before you register the deed.

This article is general information based on the Income Tax Act, 2023, as amended by the Finance Act, 2026, and NBR guidance for 2026-27. It is not legal advice for any particular case.